EU unveils proposal to review energy contracts outside bloc

BRUSSELS: The EU unveiled on Tuesday (Wednesday in Manila) plans to vet energy contracts that member states sign with countries outside the bloc as it seeks to cut dependence on Russian gas.

The European Commission, the executive of the 28-nation bloc, proposed changes so it can review such agreements before they are signed to see if they comply with EU rules.

Currently the Commission can only examine contracts after they have been signed.

“It means no country should sign an inter-governmental agreement until the Commission has given its opinion,” EU energy Commissioner Miguel Arias Canete told a press conference.

Such opinions would be given in 12 weeks and the member state would have to do its “utmost” to take the findings into consideration.

“This is an important and unprecedented step to ensure a level playing field for all,” Canete said.

“As EU markets continue to integrate, decisions taken by one member state can have a negative impact on the security of supply in neighboring countries,” he added.

The European Union is already investigating whether Russian state energy firm Gazprom
has imposed unfair prices which breach the EU’s rules, in a move that further inflamed relations already strained by the Ukraine crisis.

For the tenth year in a row, EU states imported half of their energy needs in 2014. A third of their gas imports comes from Russia alone and some newer eastern members are almost entirely reliant on Moscow.

“With political tensions on our borders still on a knife-edge, it is a sharp reminder that this problem is not going to go away,” Canete said.

Brussels also wants to be automatically notified of any commercial contract lasting more than one year if the market share it involves means that it carries a risk of security of supply.

“We consider a 40 percent market share to be an appropriate threshold,” Canete said.
Germany’s plans for a second pipeline, Nord Stream 2, to carry Russian gas under the Baltic Sea have caused some disquiet.

Rome saw it as hypocritical that Berlin should pursue a major deal when the rest of the bloc is being asked to sacrifice their interests to pursue sanctions against Russia over Ukraine.

The Nord Stream 2 consortium said its deal is only based on commercial cooperation between companies and is not based on any agreements between countries.

“Therefore there are no potential issues with EU law compliance of underlying intergovernmental agreements,” it said in a statement to Agence France-Presse.

Also under the plan, all countries will be required to ensure gas supplies to households, hospitals and other key services in the event of a crisis.

“In practice this means member states will have to give priority to vulnerable consumers in neighboring countries over non-vulnerable consumers at home,” Canete said.

The energy package proposals will now have to be submitted to the European Parliament and member states for eventual approval, which could take several years.